As Disney+ growth slows at home, should you invest in DIS stock?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jul 2, 2021
  • Disney shares traded flat on Friday after news broker domestic subscriber growth slowed in May.
  • The Disney+ streaming channel had 38 million subscribers in May compared to 37 million in April.
  • Globally, the company had 110 million subscribers compared to 103.6 million reported at the end of April.

Walt Disney Co.’s (NYSE:DIS) Disney+ channel reported a slower subscriber growth in the home market than the rest of the world. According to reports, internal data for the video streaming service showed 38 million domestic (US and Canada) subscribers for May compared to 37 million reported in April. However, global subscriber growth pushed the total subscriber numbers to 110 million, up from 103.6 million in April.

Is Disney stock a buy in July?

Disney+’s subscriber growth concerns may affect the streaming business, but Disney is a gigantic company with several businesses. Two of its leading revenue drivers, the parks and reservations and film production, will continue to thrive following the re-opening of the US economy.

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Currently, the film industry is one of the most exciting places to invest as theaters continue to increase capacities and more movies are released. In addition, Disney has a sequence of films scheduled for release this summer and beyond. Therefore, from this perspective alone, the DIS stock is a great buy in July.

Furthermore, the parks and reservation business also benefit from covid vaccinations’ success allowing people to interact in parks.

The Walt Disney stock trades at a forward P/E ratio of about 35.31. However, the valuation could improve in the coming quarters given next year’s earnings growth expectation of 112.26%. Analysts also expect the company to deliver an average earnings growth rate of approximately 51.70% in each of the next five years.

Source – TradingView

Technical overview: why buy DIS shares in Q3 2021?

Disney stock continues to trade within a descending channel formation in the 60-min chart after recovering from oversold conditions. The stock remains below the 100-day moving average, creating an opportunity to ride the rebound.

Investors can target short-term profits at about$181.73 or higher at $188.95 in the event of an extended rally. The key support levels are $171.38 and $164.13.

Bottom line: my price prediction for DIS stock in July 2021

Although Friday’s Disney+ growth concerns dampened investor mood towards DIS shares, the company’s immediate outlook is exciting. The sequence of films lined up will provide a continuous source of market optimism as moviegoers move to recover lost screen time.

Therefore the DIS stock could extend the current rebound before making a pullback.

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